A taxing time

By Melissa Grant
A BERWICK man with investment properties in Pakenham and South Yarra is bewildered his land tax bill has jumped more than 1000 per cent in the past four years.
Rob Thomas paid a modest $904 in land tax in 2006 but will have to cough up $8890 this year.
Mr Thomas said it was beyond comprehension that the State Government could jack up his bill so much, especially considering the economic climate.
“How can anybody – government or business – when the downturn has been so savage, put it up by 1000 per cent?” he asked.
Mr Thomas said it would be impossible to recoup the charge in rental increases and accused the State Government of trying to stifle small business and investment.
The Opposition says the soaring costs are a result of the State Government’s removal of a 50 per cent cap on land tax increases.
Eastern Victoria MP Edward O’Donohue said the land tax threshold applied of $250,000 hadn’t been correctly indexed in proportion to property values.
Mr O’Donohue said the charge was based on 2007’s inflated property prices. The median property value in Melbourne was $472,000 in the December 2007 quarter and $426,000 in the December 2008 quarter, he said. Mr Thomas has owned his South Yarra office block since 1983 and bought an investment house in Pakenham to help out a local family in 1987.
“For many years there was no land tax on it,” he said.
In 2006, his bill for both properties totalled $904. It increased to $1410 in 2007, $4616 in 2008, before jumping to $8890 this year.
A State Government spokesman said Spring Street had cut $490 million in land tax in last year’s budget.
“Under the Liberal Party the highest rate of land tax was five per cent and we have more than halved that rate to just 2.25 per cent.”
He said taxable value of land was determined every two years when councils independently valued properties.